The Trump Administration on Wednesday rescinded a 2015 memo issued by the Labor Department that changed the interpretation of federal wage and hour laws regarding owner-operators’ employment status.
Rescinding the rule should lessen some legal uncertainty on carriers and owner-operators, says attorney Greg Feary, president at transportation law firm Scopelitis, Garvin, Light, Hanson & Feary. The Obama-era memo created a challenge to the independent contractor model, Feary says.
The July 2015 memo issued by David Weil, head of the Labor Department’s wage and hour division under President Obama, in effect instructed businesses and state labor agencies to view owner-operators as employees. “In an analysis, that memo functionally said anyone economically dependent on a singular entity and who is exclusive to that entity is an employee,” Feary said.
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That definition applied to owner-operators leased to carriers, as often owner-operators in that model prefer to operate nearly exclusively for that carrier,which can give the appearance of economic dependence in a legal environment tilted toward that view, Feary says.
The Weil memo wasn’t specific to trucking, rather targeting all segments of the U.S. economy. Its application in trucking was concerning, says Feary, particularly given the nature of the relationship between owner-operators and carriers and the unique regulatory environment in which trucking operates.
“If I want to be an employee truck driver, I can find that job,” says Feary. “It’s much harder if I want to be an independent contractor running my own business. Why would I want to do that? Because I’m an entrepreneur and I want to build a business and live in a world where the harder I work, the more money I make.”
“But when the government comes in and rewrites the rules to say that a guy is an employee, and the motor carrier says ‘I don’t even want to bring independent contractors on board,’ it robs the opportunity [for owner-operators] to build a business,” he says.
Labor Secretary Alexander Acosta signaled during his confirmation hearing in the Senate earlier this year a return he would likely rescind the Weil memo.
The Labor Department’s action does not automatically overturn any court rulings that have sided against independent contractor status for owner-operator truckers, but it could play a large role in future cases.